Journal ArticleDOI
Experimental methods: Eliciting risk preferences
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This article present a series of prevailing methods for eliciting risk preferences and outline the advantages and disadvantages of each method, but do not attempt to give a comprehensive account of all the methods or nuances of measuring risk.Abstract:
Economists and psychologists have developed a variety of experimental methodologies to elicit and assess individual risk attitudes. Choosing which to utilize, however, is largely dependent on the question one wants to answer, as well as the characteristics of the sample population. The goal of this paper is to present a series of prevailing methods for eliciting risk preferences and outline the advantages and disadvantages of each. We do not attempt to give a comprehensive account of all the methods or nuances of measuring risk, but rather to outline some advantages and disadvantages of different methods.read more
Citations
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Journal ArticleDOI
Evidence for Countercyclical Risk Aversion: An Experiment with Financial Professionals
TL;DR: In this paper, the authors circumvent the control problems by priming financial professionals with either a boom or a bust scenario and by subsequently measuring their risk aversion in two experimental investment tasks with real monetary stakes.
Journal ArticleDOI
Risk preference shares the psychometric structure of major psychological traits
Renato Frey,Renato Frey,Andreas Pedroni,Andreas Pedroni,Rui Mata,Jörg Rieskamp,Ralph Hertwig +6 more
TL;DR: These findings offer a first step toward a general mapping of the construct risk preference, which encompasses both general and domain-specific components, and have implications for the assessment of risk preference in the laboratory and in the wild.
Journal ArticleDOI
Evidence for Countercyclical Risk Aversion: An Experiment with Financial Professionals †
TL;DR: For example, this paper found that subjects who were primed with a financial bust were substantially more fearful and risk averse than those who were pre-posed with a boom, suggesting that fear may play an important role in countercyclical risk aversion.
Journal ArticleDOI
Are Risk Preferences Stable
TL;DR: This work offers an alternative conceptual framework for preference stability that builds on research regarding the stability of personality traits in psychology and accommodates evidence on systematic changes in risk preferences over the life cycle, due to exogenous shocks such as economic crises or natural catastrophes, and due to temporary changes in self-control resources, emotions, or stress.
Journal ArticleDOI
Experimental methods: Pay one or pay all
TL;DR: In some experiments participants make multiple decisions; this feature facilitates gathering a considerable amount of incentivized data over the course of a compact session as mentioned in this paper, which can help to avoid wealth effects, hedging, and bankruptcy considerations.
References
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Book ChapterDOI
Prospect theory: an analysis of decision under risk
Daniel Kahneman,Amos Tversky +1 more
TL;DR: In this paper, the authors present a critique of expected utility theory as a descriptive model of decision making under risk, and develop an alternative model, called prospect theory, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights.
Journal ArticleDOI
Prospect theory: analysis of decision under risk
Daniel Kahneman,Amos Tversky +1 more
Journal ArticleDOI
Risk Aversion and Incentive Effects
Charles A. Holt,Susan K. Laury +1 more
TL;DR: In this article, a menu of paired lottery choices is structured so that the crossover point to the high-risk lottery can be used to infer the degree of risk aversion, and a hybrid "power/expo" utility function with increasing relative and decreasing absolute risk aversion is presented.
Journal ArticleDOI
Risk Aversion and Incentive Effects
Charles A. Holt,Susan K. Laury +1 more
TL;DR: In this article, a menu of paired lottery choices is structured so that the crossover point to the high-risk lottery can be used to infer the degree of risk aversion, and a hybrid utility function with increasing relative and decreasing absolute risk aversion nicely replicates the data patterns over this range of payoffs from several dollars to several hundred dollars.